Muhurat Trading – It Happens Only In India

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  • 08 May 2023

India is a land of diverse culture and unique rituals. From buying a TV, a car, or having a housewarming party, people try to find “Muhurat” for important decisions and occasions. This sentiment is also shared by traders and investors who flock to the markets to participate in Muhurat trading every year on Diwali. Let us look at this tradition in detail.

Taking place on the first day of the new Hindu calendar – Samvat, the session is said to set the tone for the New Year. The word Muhurat stands for ‘auspicious’, determined by the planetary positions.

The practice of Muhurat trading is more than half-a-century old. It dates back to 1957 in the Bombay Stock Exchange. At that time, online trading was unheard of. The traders would gather at the floor, decked in festive wear to trade during this special hour. It was considered as good omen to trade on this day to appease Goddess Lakshmi.

Although the times have changed, the excitement surrounding this remains intact even today. Muhurat trading has evolved into more of a festive event, with investors making token orders for symbolic reasons. Businessmen and brokers in India open new accounts. And Lakshmi Pujan and Chopda Pujan (prayers held over books of accounts) is performed.

The session is held only for an hour according to the Muhurat and is unique only to Indian stock markets! Typically, the session is divided into following parts:

  • Block Deal Session – Two parties agree to buy/sell at a fixed price and inform the exchange.
  • Pre-Open Session – Exchanges determine equilibrium price in an 8 minutes session.
  • Normal Market Session – One-hour long actual trading begins.
  • Call Auction Session – Illiquid securities are traded.
  • Closing Session – Market orders can be placed at the closing price.

Should You Participate?

The BSE Sensex has generally remained flat with a positive bias in this special trading session every year. Trading volume is usually low and fewer stocks move during that short duration.

Sensex Over the Last Decade

Source: Economic Times, Livemint, Capitaline

Sensex Over the Last Decade

However, it is a good time for both, new and experienced investors to benefit from the Muhurat session. One should always stick to good quality companies and remain in sync with your investing strategy. Muhurat trading 2022 will take place on 24th October. So, are you ready?

Wishing all a Shubh Diwali and Happy Investing!

Source & References: Money Control

Economic Times

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